From the course: Accounting Foundations: Leases

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Will the new lease accounting rule end the world as we know it?

Will the new lease accounting rule end the world as we know it?

From the course: Accounting Foundations: Leases

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Will the new lease accounting rule end the world as we know it?

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- We need better lease accounting rules. This off-balance sheet operating lease accounting is just not good. - Well, your wish is my command. - Wait, my wish is your command? - It is today. - Finally. - Starting in 2019, the off-balance sheet aspect of operating lease accounting, gone. Leased assets and lease liabilities must now go on the balance sheet. And this change has been made both to US accounting rules and to international accounting rules. - Excellent. - This change has been a long time in coming. For years, financial statement users have been calling for a change in the lease accounting rules. - You're right. Clear back in 1996, a strong proposal was circulated to get all operating lease assets and liabilities on the balance sheet. - What's been the hold-up? Why has it taken so long, until 2019, for the changes to finally be implemented? - Well, the explanation is simple. Business opposition. Companies have not wanted to bring trillions of…

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